AS widespread job growth and a shrinking workforce continues nationwide, unemployment rates fell last month in 21 states and were unchanged in 17, according to analysts.
Statistics point to overall improvement in the United States job market. There is also evidence that the falling unemployment rates in many states could be boosting wage growth, according to an analyst note, marking a breakthrough that could emerge at the national level.
Unemployment rates rose in 12 states, the Labor Department said. Employers added jobs in 31 states and cut them in 17, with little change in the remaining two states.
The figures reflect steady hiring nationwide. Employers added 223,000 jobs in June, and the national unemployment rate fell to 5.3 percent from 5.5 percent. However, last month’s rate decline occurred because some of those unemployed gave up looking for work. The jobless are not counted as “unemployed,” unless they are actively searching for work.
The overall proportion of US adults in the workforce—defined as those with jobs or looking for work—declined last month to the lowest level in 38 years, according to the government’s jobs report released earlier this month. Just 62.6 percent of people 16 and over are in the workforce, down from 66 percent before the recession.
State-wise, Nebraska has the lowest unemployment rate, at 2.6 percent, while West Virginia has the highest, at 7.4 percent. New York gained 25,500 jobs last month, the most of any state, followed by 23,000 in California and 16,000 in Texas.
The unemployment rate fell to 5 percent in the Midwest, from 5.1 percent in May, and 5.3 percent in the South, from 5.4 percent. Unemployment in the Northeast also declined to 5.4 percent from 5.6 percent. Only states in the West reported an unchanged rate, at 5.8 percent.
Smaller workforces helped lower unemployment rates in many states last month, including Connecticut, Florida and New Jersey.
Unemployment rates in 31 states are now at 5.5 percent or below, a range that the Federal Reserve considers “full health.” The healthy range suggests employers will eventually have to pay higher wages to attract workers, given the lower numbers of those unemployed.
“Reduced unemployment rates in many states are already starting to push up wage growth,” according to research released Tuesday, July 21 by David Mericle, an economist at the Goldman Sachs investment firm.
“States with unemployment rates that are at or near full health status have seen their average hourly pay levels grow more quickly than other states,” according to Mericle. “And states with steeper drops in their unemployment rates in the past year have also experienced better wage growth.”
Some analysts’ measures suggest that paychecks nationwide are growing a bit faster, although the evidence is mixed. The national average hourly pay rose just 2 percent in June, compared with a year ago. That rate still falls much lower than the 3.5 percent to 4 percent typical for a healthy economy.
Goldman Sachs forecasts that wage growth will reach 2.75 percent by the end of this year, and will reach 3.5 percent next year. (With reports from the Associated Press)
